Yahoo Finance OncoCyte Corp (OCX) Q4 2023 Earnings Call Transcript Highlights: Strategic Partnerships and ...
Average Burn Rate: Reduced to $3.91 million over the past three quarters from $11 million in the same period a year ago.
Partnership Investment: Bio-Rad invested in a $15.8 million private placement offering.
Global Transplant Market: Over 157,000 transplants annually with a 9.1% growth rate.
Q4 Cash Reserves Decline: $4.4 million, leaving $9.4 million on the balance sheet, a 58% improvement year over year.
Q4 Consolidated Revenues: Approximately $314,000.
Q4 Cost of Revenues: Approximately $431,000.
Q4 Research and Development Expense: Increased 85% year over year to $2.5 million.
Q4 General and Administrative Expense: Decreased 66% year over year to $1.8 million.
Q4 Sales and Marketing Expense: Increased 74% year over year to $582,000.
Q4 GAAP Net Loss: $16 million, or $1.99 per share, compared to a net loss of $12 million, or $2.8 per share, in the fourth quarter of 2022.
Q4 Non-GAAP Operating Loss: $4.2 million, an increase of $1.2 million compared to the same period in 2022.
Release Date: April 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
OncoCyte Corp has successfully reduced its average burn rate from $11 million to $3.91 million compared to the same period a year ago.
The company has developed GraftAssure, an easy-to-use manufactured product, with the first prototypes exceeding quality and performance expectations.
OncoCyte Corp announced a partnership with Bio-Rad, which includes a $15.8 million private placement offering to support development and commercial efforts.
The company has achieved reimbursement for VitaGraft Kidney and is pursuing claims expansion based on promising clinical study results.
OncoCyte Corp has seen a 58% improvement in cash burn year over year, with Q4 benefiting from cost reductions implemented earlier in the year.
Negative Points
The company's consolidated revenues for the fourth quarter of 2023 were relatively low at approximately $314,000.
Cost of revenues for the fourth quarter were higher than the revenues, at approximately $431,000.
Research and development expenses increased by 85% year over year, indicating a significant increase in investment towards product development.
GAAP net loss from continuing operations was $16 million, or $1.99 per share, compared to a net loss of $12 million, or $2.8 per share, for the fourth quarter of 2002.
There are no minimum volume commitments in the agreement with Bio-Rad, which could imply uncertainty in revenue projections from this partnership.
Q & A Highlights
Q: Can you tell us what Bio-Rad's installed base is in the US and over the US, for the machines that can run this test? A: They don't publicly disclose their installed base.
Q: How is the commercial strategy with Bio-Rad going to work going forward? A: OncoCyte will add about five headcount for commercial efforts, with Bio-Rad marketing the product and OncoCyte closing the accounts. Outside the US and Germany, Bio-Rad has full commercial and distribution rights.
Q: Are there any minimum volume commitments in the agreement with Bio-Rad? A: There are not.
Q: Will OncoCyte continue to offer the transplant tests in the US as a lab-developed test or will it fully transition to being kitted? A: OncoCyte will maintain its service lab in Nashville for clinical development and to engage with MolDX for claims expansion. They plan to bridge clinical claims from the lab-developed test to the kitted product in the future.
Q: What should we expect for pricing on the kits once you fully transition to a cleared version of the product? A: Pricing is usually capped at about 50% of the reimbursed value for the test. The exact price will be set once the national price for the kit is established.
Q: Will OncoCyte be sharing a portion of the kit pricing with Bio-Rad? A: Yes, that's correct.
Q: Can you provide more detail on the commercial strategy with Bio-Rad? A: OncoCyte expects to add incremental headcount for the commercial team and will focus on site activation and building an installed base of early adopters.
Q: What are the revenue expectations going forward and the cash burn outlook? A: Revenue from the RUO product is expected to start in Q4, with incremental growth thereafter. The company is committed to maintaining a low cash burn, aiming to keep it below $5 million per quarter on average.
Q: How will the mechanics of the agreement with Bio-Rad work for international markets that are not Germany? A: It is a manufacturing and supply agreement. Bio-Rad will be OncoCyte's customer, and the revenue will hit OncoCyte's top line with a normal COGS-type calculation.
Q: Will there be two revenue streams in the United States, one for the lab version of the test and another for the RUO shipped revenue? A: Yes, both will show up on the top line, one as services and the other as products.
Q: Can you give any color on the operating expense mix, particularly with the incremental sales and marketing spend? A: About five headcount will be added to the sales and marketing team, which will slightly increase the burn rate, but the company will try to maintain it below $5 million per quarter.
This article first appeared on GuruFocus.
